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JAKE TAPPER, CNN ANCHOR: You might not believe who is advising president-elect Trump on his Cabinet. THE LEAD starts right now.

Trump called Obama's presidency a disaster, but now the president- elect says he takes Obama's Cabinet recommendations very seriously, and he says Obama thought very highly of at least one of his picks. We are guessing it wasn't his reported pick for the EPA, who calls climate science unsettled.

Shots in the dark. Rebel fighters in Syria desperately trying and failing to stop bombs from demolishing buildings and ending lives. Still, some say they'd rather die than flee. CNN once going inside Aleppo to witness the horror up close.

A day which will live in infamy 75 years later, when Japanese planes rained down on Pearl Harbor, killing more than 2,000 Americans. A 103-year-old survivor and veteran today visits THE LEAD to describe what he saw on that dark day.

Good afternoon, everyone. Welcome to THE LEAD. I'm Jake Tapper.

A source telling CNN the president-elect, Donald Trump, will nominate yet another general to his Cabinet, retired Marine General John Kelly, who will helm the Department of Homeland Security, pending Senate confirmation.

Also today, president-elect Trump saying his secretary of state pick could come as early as next week. And Mitt Romney is still apparently in the running.

Trump also said today he is honored to be named "TIME" magazine's person of the year, but he did take some issue with the subhead tucked underneath his name, president of the divided states of America, it says. Trump denied he has done anything to divide the country. OK.

Trump this morning also taking credit for the huge market rally since his election four weeks ago. The Dow Jones industrials closing today at 19547 points, more than 1,200 points above where it was on November 8.

CNN's Jason Carroll is live outside Trump Tower.

Jason, the Trump transition team also confirmed Trump has tapped Iowa Governor Terry Branstad to be the next ambassador to China. Why governor Branstad?

JASON CARROLL, CNN NATIONAL CORRESPONDENT: Well, there are a couple reasons for that.

This is a man, this is a governor who has had a longstanding relationship with the Chinese government since 1985. The thought is, because of that relationship, perhaps he can smooth over some of the fallout that controversial call that Trump had with the Taiwanese leader.

Trump, for his part, though, Jake, says that he is feeling lucky that he made the cover of "TIME" magazine.

(BEGIN VIDEOTAPE)

CARROLL (voice-over): President-elect Donald Trump can add another title to his name, "TIME" magazine person of the year.

DONALD TRUMP (R), PRESIDENT-ELECT: It's a great honor. It means a lot.

CARROLL: But look closely at the cover. The caption on the cover calls him president of the divided states of America, a moniker Trump told NBC News is not his fault.

TRUMP: I didn't divide them. They're divided now. I mean, there is a lot of division. And we're going to put it back together and we're going to have a country that's very well-healed.

CARROLL: Trump took that same message on the road Tuesday night at a rally in North Carolina.

TRUMP: We will heal our divisions and unify our country. When Americans are unified, there is nothing we cannot do, nothing. No task is too great, no dream too large, no goal beyond our reach.

CARROLL: The president-elect's goal right now, piecing together his administration. CNN confirms Trump will name retired Marine General John Kelly, the former head of Southern Command, as his homeland security secretary. Today, he also named Iowa Governor Terry Branstad as his ambassador to China. One of the reasons? Branstad has a decades-long relationship with Chinese President Xi Jinping.

As for the secretary of state job, no decision yet, Trump saying Mitt Romney is still in the running and insists he isn't stringing the former rival along.

TRUMP: No. It's not about revenge. It's about what's good for the country. We had some tremendous difficulty together, and now I think we have come a long way.

CARROLL: But it's not just his Cabinet. Trump is also calling out companies who he says are making bad deals for America, like Carrier and Boeing.

TRUMP: I hope I am judged from the time of the election, as opposed to from January 20, because the stock market has had a tremendous bounce. And people are seeing very good things for business in this country.

CARROLL: Trump threatened Tuesday to cancel Boeing's deal to build a new Air Force One, tweeting in part that costs are out of control. Since then, Trump says he has talked to Boeing's CEO and both agreed to work it out.

TRUMP: We're going to get the prices down. And if we don't get the prices down, we're not going to order them. We're going to stay with what we have.

CARROLL: Today, Trump also met with Chicago Mayor and former Obama White House Chief of Staff Rahm Emanuel.

RAHM EMANUEL (D), MAYOR OF CHICAGO: One, about White House operations and how to make that work. Second, we also discussed immigration.

[16:05:04]

CARROLL: Emanuel's former boss President Obama is also on Trump's call list, telling NBC News that he and the current president have talked several times, asked for his advice and takes his recommendations seriously.

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: The president is responsive to requests and phone calls from the president-elect. He is certainly pleased that he can offer advice and assistance that may be useful to the incoming administration.

(END VIDEOTAPE)

CARROLL: And Trump has continued to take meetings here today at Trump Tower, including meeting with Oklahoma's attorney general, Scott Pruitt, who is looking to be a likely choice to head up the EPA, much to the disappointment of many of Pruitt's critics, who say he is too close to the fossil fuel industry.

Trump tomorrow, Jake, will be heading to OSU to meet with victims and first-responders from there -- Jake.

TAPPER: All right, Jason Carroll, thank you so much.

With the selection of Retired Marine General James Kelly to lead the Department of Homeland Security, Trump's national security team is taking shape. Last night at the second stop on his thank you tour, Trump touted the credentials of his choice for defense secretary, retired Marine General James "Mad Dog" Mattis.

Let's get right to CNN's chief security national correspondent, Jim Sciutto.

These are two distinguished generals who are highly regarded on both sides oft aisle.

JIM SCIUTTO, CNN CHIEF NATIONAL SECURITY CORRESPONDENT: No question. And with these early choices, you're beginning to see some patterns here in the Trump administration. One is a variety of views, backgrounds, resumes, certainly a predilection for generals. You have Michael Flynn as national security adviser, Mattis going, pending a waiver, to the Defense Department, now General Kelly, as well as two other military men, including Scott Pruitt and Petraeus, under consideration for secretary of state.

What you're not seeing, though, is a consistency of point view on policy issues. In fact, some of have points of view, it would seem, that are in direct contradiction to those of the president.

(BEGIN VIDEOTAPE)

SCIUTTO (voice-over): He toasted to friendship with China's president in 2012. And now Iowa Governor Terry Branstad is Donald Trump's nominee to be U.S. ambassador to Beijing.

The governor and President Xi Jinping have a long relationship. And under Branstad, Iowa's exports to China have grown exponentially.

UNIDENTIFIED MALE (through translator): Governor Branstad is an old friend of Chinese people.

SCIUTTO: But Branstad's friendly approach to Beijing contrasts sharply with president-elect Trump's vow to confront China on trade and national security. Trump's nominee to lead the Pentagon is retired Marine General James Mattis, pending a congressional waiver since he has not been out of uniform seven years, as required by law.

TRUMP: Mad Dog plays no games, right?

SCIUTTO: Like Trump, Mattis is hawkish on Iran.

GEN. JAMES MATTIS (RET.), FORMER COMMANDER, U.S. CENTRAL COMMAND: The Iranian regime, in my mind, is the single most enduring threat to stability and peace in the Middle East.

SCIUTTO: But while Trump has repeatedly praised Russia...

TRUMP: Wouldn't it be nice if we actually did get along with Russia?

SCIUTTO: ... and denied that Moscow interfered in the U.S. election, despite the assessment of the U.S. intelligence community, Mattis Russia and President Putin as a grave threat.

MATTIS: Putin goes to bed at night knowing he can break all the rules.

SCIUTTO: Trump's leading choices for secretary of state also have fundamentally different views of the Russia threat. Mitt Romney famously identified Moscow as America's leading foreign policy challenge during his own run for president in 2012.

MITT ROMNEY (R), FORMER PRESIDENTIAL CANDIDATE: I'm not going to wear ROSEN: -colored glasses when it comes to Russia or Mr. Putin. SCIUTTO: Another possibly for State, ExxonMobil change and CEO Rex

Tillerson, has close ties to Russian President Putin, signing a multibillion-dollar deal with Russia's state oil company in 2011 for exploration in the Arctic. Today, Trump said he's days away from a final decision on his top diplomat.

TRUMP: I think fairly close. I think next week will be the time that I announce it.

SCIUTTO: Trump's pick for homeland security, retired Army General John Kelly, and the president-elect are very much like-minded on another key international security issue, protecting the U.S. southern border, as Kelly testified before Congress in 2015.

GEN. JOHN KELLY (RET.), FORMER U.S. SOUTHERN COMMAND COMMANDER: If a terrorist or almost anyone wants to get into our country, they just pay the fare. No one checks their passports. They don't go through metal detectors.

(END VIDEOTAPE)

SCIUTTO: General Kelly's service marked by perhaps the greatest sacrifice. He is, as we call them, a Gold Star dad. He lost his son, 1st Lieutenant Robert Kelly, who was killed in fighting, a U.S. Marine in Helmand Province in Afghanistan in 2010. That's his grave there. He is buried in Arlington National Cemetery.

I was embedded with the Marines in Helmand around the same time. Some of the fiercest fighting, and his unit was one of the units that lost the most of its personnel in Afghanistan of any units in Marines history.

TAPPER: General Kelly has spoken very movingly about what it means to be a Gold Star dad.

Jim Sciutto, thank you so much.

Joining me now is the outgoing Republican Senator from New Hampshire Kelly Ayotte. She serves on the Armed Services Committee. And she just gave her farewell speech on the Senate floor.

[16:10:05]

Senator Ayotte, thanks so much for being here. Really appreciate it.

SEN. KELLY AYOTTE (R), NEW HAMPSHIRE: Thanks, Jake.

TAPPER: And we hope you're not going to be a stranger, even though you are moving on from the Senate.

Let me ask you about General Mattis, because your colleague Kirsten Gillibrand, Democrat from New York, says that she is not comfortable approving of that waiver. You need to be out of the military for seven years, according to the law, to then head up the Pentagon. General Mattis has only been out for three years. What do you think? AYOTTE: I think that General Mattis is one of the most distinguished

military leaders in the history of our country, a phenomenal choice to be the secretary of defense.

And I really admire the fact that, you know, he is not a yes man. He is going to call it like he sees it. He will give the president-elect very solid advice. And so he deserves this waiver. And I think that, unfortunately, some people are going to play politics with it. They should not.

This is about the safety and security of our country. And I think that General Mattis will serve with such distinction as secretary of defense.

TAPPER: I was talking to some Republicans on the Hill who told me that they have told the Trump team that they don't think General David Petraeus could get confirmed, that there are enough, not only Democrats, but Republicans who are concerned enough about the breach of security through -- that happened when he shared the classified information and also that he lied to the FBI.

Is that what you are hearing as well? Is that your impression?

AYOTTE: I don't know that that's my impression. I think there are many on the Hill that admire the service also of General David Petraeus. I have had the chance of knowing him personally as well, and obviously he has really talked about his mistakes.

He has moved forward. And no one can take away from him his incredible service to our country.

So your colleague Senator Lindsey Graham says that he is going to have hearings on the Russian hacking into the DNC and the Russian hacking into the e-mails of John Podesta, Clinton campaign chairman. There is obviously a lot of concern by a lot of people. Marco Rubio, your colleague, has talked about how this has been, you know, unprecedented and it's offensive.

Take a listen to what Lindsey Graham had to say today to my colleague Manu Raju.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: I'm going after Russia in every way you can go after Russia. I think they're one of the most destabilizing influences on the world stage. I think they did interfere with our elections, and I want Putin personally to pay a price.

(END VIDEO CLIP)

TAPPER: Do you share his view that Putin needs to pay a price?

AYOTTE: Well, listen, I share the view that I think we need to be much tougher on Russia.

If you look at their behavior, I share the view that the reset policy of this past administration has really been a failure and we have seen a lot of bad behavior by Russia. It's time to certainly make sure that Vladimir Putin understands that we are going to be quite serious when -- whether he is undermining our efforts to defeat ISIS in Syria and Iraq, whether he is in a situation where there are cyber-crime issues involved, whatever it is, I think we do need to take a stronger tack with Russia.

TAPPER: But you must be concerned then, because that's not really what we're hearing from president-elect Trump. He seems to want to be even closer with Vladimir Putin.

I don't think I have heard him criticize Putin or Russia ever.

AYOTTE: Well, we will see. This is going to be one of the great challenges of this administration.

But look at who he has nominated for secretary of defense. I think General Mattis sees these issues very clearly. He will have his advice. I know that he has announced General Kelly as well, who has a tremendous military history as well. So, he is putting people around that him are not yes men, that are going to give him the straight on this, and then he will approach Russia, I'm sure, with toughness.

TAPPER: Mitt Romney is also being discussed as a possible secretary of state. He is from your neighboring state of Massachusetts. He actually has a home in New Hampshire.

AYOTTE: He does.

TAPPER: I think you think pretty highly of him. Do you think he would be a good pick?

AYOTTE: I think he is incredibly qualified. He handles himself very well. He obviously understands international issues.

And, really, the president-elect is interviewing a number of very qualified people for that position, there is no doubt. And this is a very important job, and there is so much work to be done after John Kerry and the issues that need to be addressed, whether it's with Iran, whether it's Russia, China, and it's a very important position.

TAPPER: Lastly, you're leaving the Senate. What do you think -- what are you proudest of, and what is your biggest regret of your time in the Senate?

AYOTTE: I am really proud of the work that we have done,in fact, in helping turn around getting resources on the opioid epidemic facing my state. We just passed the Comprehensive Addiction and Recovery Act this summer, working with my colleagues on that. I helped lead that.

And also now, on the 21st Century Cures bill, a billion dollars to help those struggling with addiction, I am very proud of that. In terms of looking of things, I know that there is so much more work

that we need to do for our veterans -- one thing I was passionate about, my husband is a combat veteran -- is really making sure -- our veterans need the very best care. That has not happened.

And I hope this administration really takes that to heart and does make sure that our veterans, for what they have sacrificed on our behalf, get the very best care.

So, I wish I could do more on that. That's so important.

TAPPER: All right, please come back.

AYOTTE: Thank you, Jake.

SEN. KELLY AYOTTE (R), NEW HAMPSHIRE: And I hope this administration really takes that to heart and does make sure that our veterans, for what they have sacrificed on our behalf, get the very best care.

[16:15:07] So, I wish I could more on that. That's so important.

JAKE TAPPER, CNN ANCHOR: All right. Please come back.

AYOTTE: Thank you, Jake.

TAPPER: We want to keep talking to you.

AYOTTE: Appreciate it.

TAPPER: Thank you so much.

AYOTTE: Thank you.

TAPPER: It's glitzy and glamorous. It's the president-elect's brand new hotel just a few blocks away in Washington, D.C. The Trump Organization is already profiting from foreign governments booking rooms there. That story next in our series on "Conflict of Interest Watch".

Stay with us.

(COMMERCIAL BREAK)

TAPPER: We're back with another installment of our series "Conflict of Interest Watch." We are tracking how Donald Trump's business dealings could create messy, unethical, even illegal situations after his inauguration.

One of the most glaring problems may be just down the street from the White House at the Trump Hotel. Could folks trying to ingratiate themselves with the new president find themselves becoming regular customers?

Well, in the last 24 hours, events at the hotel might be seen as an attempt to make nice with the incoming commander-in-chief.

CNN's Elise Labott joins me now from the Trump Hotel here in D.C.

Elise, some diplomats are already admitting that their relationship with Trump, they think could benefit from their throwing business to the hotel.

ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: Well, Jake, one ambassador told me that they expected a lot of their counterparts would be holding events at this hotel, because it's not only a very nice hotel, but it's a great way to make brownie points with Donald Trump.

[16:20:10] What a better way for your foreign leader to visit and when the White House asks where they're staying to say the president's hotel. But what the hotel is drawing in customers and lining Donald Trump's pockets with money, it's also causing a lot of controversy.

(BEGIN VIDEOTAPE)

LABOTT (voice-over): Donald Trump's new hotel in the historic post office steps from the White House is the place to be for Washington insiders looking to make inroads with the president-elect.

UNIDENTIFIED FEMALE: I think the hotel is beautiful.

LABOTT: Today, diplomats and U.S. officials descended on the hotel for Bahrain's national day celebration.

And Tuesday night, the Heritage Foundation, a conservative think tank with ties to the transition, invited their donors to the hotel to hear from Vice President-elect Mike Pence. Sales were soft when the property opened in September despite promotion by the candidate himself.

DONALD TRUMP (R), PRESIDENT-ELECT: This is the most coveted piece of real estate in Washington, D.C., the best location.

LABOTT: But that all changed after election night. Just days later, diplomats packed a ballroom to hear a sales pitch, a special promotion through the Arab Chamber of Commerce post, quote, "a new level of luxury in D.C. with unparalleled service."

The aggressive marketing is paying off. The hotel is almost fully booked for holiday parties and sold out for inaugural weekend. Trump even pointing to its prime location on his visit to Capitol Hill.

But it's not without controversy. Next week, the embassy of Azerbaijan is holding a joint Hanukkah party with a collection of American Jewish groups. The organizers cited the hotel's kosher food, location and availability, telling CNN, quote, "It was done purely on a pragmatic basis that had nothing to do with Trump himself."

But others are objecting.

ANN TOBACK, WORKMEN'S CIRCLE: They say the party is a celebration of religious freedom and diversity. And when you compare that to the messages that have come from the Trump campaign for the last years, that is exactly opposite of what we have been hearing.

LABOTT: Some diplomats admit spending money at Trump's hotel is an easy, friendly gesture to the new president. Others commend the hotel's impeccable service and discounted promotional rates.

But critics worry foreign governments and special interest groups will patronize the hotel to curry favor with the president-elect. A clause in the U.S. Constitution warns, quote, "No person holding any office can profit from any foreign government."

RICHARD PAINTER, FORMER WHITE HOUSE ETHICS LAWYER: The president of the United States is not an in-keeper, and certainly not for foreign diplomats. And in order to be an effective president, he is going to have to make this change over to being president.

(END VIDEOTAPE)

LABOTT: Now, we're expected to hear in the next few weeks how Donald Trump is going to transfer his business over to his family, including this hotel, before taking office. Now, he also may be in violation of the hotel's lease that says that no member of the government who holds office can hold any part of this lease.

But, Jake, the controversy does not end at that hotel in Washington. LeBron James of the Cleveland Cavaliers says he and several of his teammates will not be staying at the scheduled stop of Trump's hotel in Soho when they play the New York Knicks this week in Manhattan -- Jake.

TAPPER: All right. Elise Labott, thank you so much.

And some transition news coming in. The Trump campaign announcing that the president-elect will tap Linda McMahon to head the Small Business Administration. McMahon is best known as the co-founder and former chief executive officer of the WWE, that is World Wrestling Entertainment, for those of you who don't tune into "Monday Night Raw" on a weekly basis. McMahon also launched a failed bid for the Senate in 2010 and she launched a failed bid for the Senate in 2012.

Donald Trump's new hotel in D.C. is not the only conflict of interest concern, but the House speaker doesn't seem to worry. That's ahead.

Then, a baby seven days old among hundreds of people forced from their homes in the middle of a war zone. The new warning from the Syrian regime, next.

(COMMERCIAL BREAK)

[16:28:41] TAPPER: Welcome back to THE LEAD.

Staying with politics now. For years, Donald Trump openly questioned whether President Obama was born in America. Spoiler alert he was. Now that he's met Obama, President-elect Trump says he actually really likes him.

For more, let's bring in our political panel. Former White House press secretary for George W. Bush, Ari Fleischer, "USA Today" senior politics reporter, Heidi Przybyla -- of course I mess up the Heidi -- and Washington bureau chief for "TIME" magazine, Michael Scherer, who wrote the cover story for the brand new "TIME" Person of the Year which in 2016 goes to Donald Trump.

Thanks one and all for being here.

Ari, let me start with you. The president-elect said of Obama, although they disagree on a lot of policies, he has taken President Obama's advice. Take a listen.

(BEGIN AUDIO CLIP)

TRUMP: I never met him before this, and I never spoke to him before this. I really -- I do like him. I love getting his ideas. I take his recommendations very seriously, and there are some people that I will be appointing, and in one case have appointed, where he thought very highly of that person.

(END AUDIO CLIP)

TAPPER: So, obviously saying that, you know, he is really -- he likes him, he is taking his advice. You have some insight into the presidents' club. Does that surprise you?

ARI FLEISCHER, FORMER WHITE HOUSE PRESS SECRETARY FOR GEORGE W. BUSH: It does and it doesn't. In a year in which everything surprised everybody, why should we be surprised when these two now getting along?

TAPPER: Right.

FLEISCHER: But it's really interesting. You know, Donald Trump said about himself that his ability to be boring, that he has ability to be differently than he acted on the campaign trail, you saw that when he went to Mexico and had that news conference with the head of state of Mexico.